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Oracle evades tax; More MNCs follow suit in India
By Benny Thomas
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Tuesday, 21 April 2009, 02:51 IST |
8 Comments
230 crore for a period of almost five years from 2003 through 2008.
IBM was asked to shell out 72 crore by the tax department in 2007. In the same year, SAP was also caught in the tax net and asked to pay 38 crore . The saga continued in 2008, with Microsoft being asked to pay almost 700 crore for the service tax evasion. Though all these companies might have paid their debts, the story seems to continue with Oracle - the latest entrant.
The problem is rampant in India and analysts feel that the total evasion of taxes may go to millions of dollars. An industry expert says, "There would at least a billion dollar lost by the government due to tax evasions in India." According to him the main reason for this problem is that there are a wide variety of rules and ambiguity that lies in their applications.
"As the industry is finding it hard to cope with the double taxation system that includes VAT and service tax, firms have the tendency to skip one of the taxes for a period," he said, pointing out that this kind of an issue is currently in focus. The industry expert points out three major reasons that are keeping this problem afloat. The basic problem is the lack of clarity with respect to tax related issues. The second thing is the interpretation capability available with these people and the third thing is that it is not necessary that firms take a holistic view of all the problems that are there. The interpretation of the software download with respect to applicability of taxes was a source of lot of controversies and that's how many companies including SAP got a notice.
He feels that The PricewaterhouseCoopers and KPMGs of the world need to share the blame for tax evasion, because companies go by their interpretations that are filled with legal jargons. According to a spokesperson of a leading auditing firm, "There are lots of confusions that the companies face when it comes to taxation related issues, but we try our best to clarify them."
"Incidentally, I don't think National Association of Software and Services Companies (NASSCOM) has done enough, they have not been as vocal with local problems and it is now that they have kind of woken up", he says. NASSCOM officials were unavailable for any comments.
According to the expert, setting up manufacturing units in India can bring some respite to this issue, as entire process becomes very transparent to everyone. "If you are manufacturing here, you would be a much better corporate citizen", he added.
